Laws victims can invoke against brains behind loan app frauds
I
nstances of loan application fraud with Chinese "involvement" are rapidly increasing, akin to the rapid spread of Covid-19, which also originated from China.
The players in this game resort to the psychological concept of "Foot in the Door" by playing on the need and naivete of the victims.
With the promise of good and double returns, these apps attract the vulnerable. Once the app is downloaded, access to phone data is available to the fraudsters.
To establish goodwill and legitimacy, initially about 10-15 per cent return is given to the victim. This is how they (the scamsters) put the "foot in the door". As soon as this incentive and return is received by the victim, the door to their doom opens, thereby resulting in them being deceived, duped, and cheated.
"The phone data is further used to threaten and extort more and more from the victim in question. When personal information and morphed pictures are circulated on social media apps, victim, due to social stigma often attempt or actually commit suicide," said advocate Anant Malik.
The recent expose of such cases pan-India has invited attention of the law enforcement agencies as well as the Reserve Bank of India.
In fact, India has even banned about 600 apps from the Google App Store, yet the problem looms large.
India has a comprehensive legal framework in place to address loan app frauds and related cybercrimes.
"The alleged accused can be charged under different sections of the Indian Penal Code (IPC) like cheating, extortion, forgery and criminal conspiracy," said Malik.
"These offences are taken into consideration as predicate offences which in turn also lead to registration of an ED Case by the Directorate of Enforcement under Prevention of Money Laundering Act in order to trace the proceeds of crime generated by these acts which involve the steps of placement, layering, and integration of proceeds of crime," he added.
The victims of loan app frauds face various risks, including financial loss, data privacy breaches, and potential exposure to other criminal activities. The need for legal remedies and preventive measures is evident to safeguard the interests of borrowers and protect them from falling prey to unscrupulous entities.
"Sections of the Information Technology Act, 2000, such as 43 (penalty and compensation for unauthorised access to computer systems), 65 (tampering with computer source documents), 66 (computer-related offenses), 66A (sending offensive messages), 66C (identity theft), and 66D (punishment for cheating by personation using computer resource) pertain to cybercrimes committed through loan apps and digital platforms," advocate Shashank Dewan told IANS.
He said that guidelines on digital lending by the RBI govern the operations of financial institutions, including digital lending platforms, and aim to create a safer and more reliable digital lending environment.
The Consumer Protection Act, 2019, which does not specifically address online loan apps, empowers consumers to seek redressal against unfair trade practices and fraudulent activities, including those related to loan app frauds.
"While the rudimentary and essential step for any victim is to get an FIR registered, other remedies that one can undertake himself/herself is to approach a reputed and secure financial institution such as a bank/NBFC to apply for a loan," Malik said.
The rise of fraudulent loan apps in India necessitates immediate attention and robust legal actions.
"Other precautions can be to read the reviews of the App one downloads, check if there is a physical office of the concerned entity. Moreover, one does not need to pay to get a loan approval, thus if a processing fee is asked upfront by transfer of payment by cash, that raises suspicion and must not be taken lightly," Malik said.
It is imperative for victims to report such incidents to the relevant authorities, including the police, cybercrime cells, and regulatory bodies like the RBI, to ensure appropriate legal actions against the fraudsters and protect others from falling victim to similar scams.
"It is vital for the government, regulatory authorities, financial institutions, and technology companies to collaborate closely to create a secure and transparent digital lending ecosystem, where borrowers' interests are safeguarded, and fraudulent operators are held accountable," Dewan said.
✔️ Laws victims can invoke against brains behind loan app frauds
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